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The Material Adverse Change Trap That Cost a Buyer 45 Million
M&A contracts often include a Material Adverse Change (MAC) clause, allowing buyers to walk away if something fundamentally harms the target. But these clauses are notoriously hard to invoke. In this episode, we dissect a case where a buyer tried to invoke a MAC after a raw material price spike caused a 30% earnings drop at a specialty chemicals company. The seller fought back, a court ruled the downturn was industry-wide and foreseeable, and the buyer lost $45 million in legal fees and settlement. Lucas and Luna explore how narrowly courts interpret MAC clauses, why vague language is…
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